Quote:
Originally Posted by legion
Hmm...flooding the market with a commodity when the prices are high and expecting them to stay high?
Seems like a winning strategy to me...
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You missed this part
To capitalize on this, the traders are stockpiling huge volumes of oil at today's prices, while locking in a profit by contracting to make future deliveries at richer prices.
Their customers are willing to pay future premiums based on expectations that oil's supply-and-demand picture will eventually tighten as the economy regains health
Look here
http://www.nymex.com/lsco_fut_cso.aspx
Feb 09 is $35 but May 09 is $50
Buy today at $35, contract to deliver in May for $50, 43% profit in 5 months, is annualized +100% profit. Less carrying cost (charter, insurance, and interest), still probably pretty attractive.
Also read this for more detail
http://www.safehaven.com/article-12248.htm
Interestingly, oil tanker stocks are still near their lows.